Rupiah Banda’s influence in
abusing and circumventing set government institutions and procedures aided RP
Capital to ensure LAP Green Networks boughtZamteldespite not being fit to run the company.

This is according
to the commission of inquiry set by President Michael Sata to investigate the
sale of Zamtel.

The report gives a lowdown on Dora Siliya’s antics and
manoeuvres which saw her disregard legal advice of the Attorney General’s
chambers and often chased top government and quasi government officials who
disregarded her sworn trajectory over the sale she orchestrated.

The
report revealed a deliberately complicated transaction to siphon money from
Zambia and stated that despite the government selling Zamtel to LAP GreenN for
US $257 million, prior to privatisation, Zambia paid US $120 million for tax
shares in Zamtel, and a further US $214.45 million for investment
shares.

“GRZ effectively paid Zamtel US $334.45 million to
retain 100 per cent of its shareholding in Zamtel immediately prior to
privatisation,” the report read in part. “It is most perturbing that the GRZ
decided to pay for the 25 per cent shareholding it already owned in Zamtel and
paid a total US $334.45 million in what was termed as Tax Shares and a
Subscription Amount. On the other hand Lap GreenN only paid US $257 million for
75 per cent shareholding of which GRZ was only entitled to US $42.6 million
about 16.6 per cent of the value. The net effect of this deliberately
complicated transaction was that Lap GreenN took over Zamtel as a debt-free
company with US $64 million sitting in its bank account, with the US $64 million
having been provided by the GRZ and equivalent to the exact sum of money
required for the newly privatised company’s capital expenditure for its first
year of operations.”

The report stated that the sale of Zamtel was
fraught with irregularities in the tender processes, coercion in the acquisition
of Zesco’s assets, bad faith with the selection criteria, negligence in the
management of the account of GRZ net proceeds, and a failure to monitor
post-privatisation.

The commission of inquiry led by justice minister
Sebastian Zulu revealed that RP Capital was so powerful that it used to draft
speeches for former president Banda made on Zamtel as well as ministerial
statements on the US$257 million sale of 75 per cent of Zamtel to Lap
GreenN.

The report detailed that key government institutions like Zambia
Development Agency (ZDA) and Zesco
made decisions and abrogated their normal tender procedures as well as normal
way of doing business because they ‘may have been under duress.’

The
report revealed that in some cases, officials who resisted the influence from
Banda’s aides were dismissed from their positions rampantly.

Among the
key advisors of Banda who were mentioned in the transaction to have been
exerting immense pressure from the powerful position of State House included Dr
Richard Chembe, economic advisor to former president Banda, and Joseph Jalasi,
who was legal advisor.

The report indicates in some cases severe
resistance to uphold professionalism by some top officials like Cyprian
Chitundu, who resisted the ceding of the Zesco optic fibre network to Zamtel to
feed into the directive by RP Capital and was consequently fired and instantly
replaced by Ernest Mupwaya.

Chitundu has since been reappointed Zesco
managing director in the aftermath of President Sata’s victory.

According
to the detailed 112-paged report, RP Capital, single-sourced to valuate Zamtel
before privatisation and subsequently hired as transaction advisors for ZDA by
clandestine collaboration between former president Rupiah Banda's son, Henry and
former communications minister Dora Siliya, was in the “driving seat” for the
controversial transaction.

“This committee categorically and
unequivocally states that our investigation clearly found that the manner in
which the Zamtel sale was conducted was as follows: The Zamtel sale was driven
by unreasonable sense of urgency and haste with no consideration, no regard for
normal and expected deliberations, consultations and reviews,” according to the
report.

“The committee has covered numerous email correspondence from RP
Capital’s Peter Heilner issuing directives to high-ranking and senior GRZ, ZDA
and Zamtel officials, set timetables and tasks, drafted ministerial and even
Presidential speeches and letters for Banda and orchestrated the deployment of
personnel to strategic positions and departments. It is clear from the outset,
RP Capital, through Peter Heilner, single-handedly planned, managed, drove,
controlled and executed the entire process. The GRZ, ZDA, ZICTA (Zambia
Information Communications Technology Authority), State House staff, Zamtel and
all other such were reduced to the role of mere spectators with little or no
input and control over the process.”

According to the report, the
government paid US$ 334 million about K1.7 trillion to purchase its own 25 per
cent shares in Zamtel during privatisation, according to a highly placed
government source.

LAP GreenN, which bought 75 per cent shares in Zamtel
last year, has only paid US$ 15 million about K 76 billion to the Zambian
government out of the purchase price of US$257 million about K1.3 trillion while
RP Capital Advisors—the advisors in the transaction—received a cash payment of
about US$ 12.6 million or about K 64 billion from the transaction.

The
source familiar with the findings of the Sebastian Zulu-led commission of
inquiry into the sale of Zamtel’s 75 per cent shareholding said it was
disturbing that the government paid US$ 334 million, about K1.7 trillion, for
the retention of the 25 shareholding it already owned in Zamtel in what was
termed tax shares and a subscription amount.

The report revealed that Lap
GreenN made a number of hefty concessions from Zambian government despite not
qualifying to be the preferred bidder for the majority stake in
Zamtel.

“The original LAP GreenN non-binding was based on 70 per cent
staff redundancy. This committee notes that the final binding bid allowed for
100 per cent staff redundancy as a consequence of the negotiating process,
perhaps as a result of Luwani Soko,” revealed the report.

“The
negotiating team conceded several incentives that were not part of the original
LAP GreenN non-binding bid: The inclusion of the Zesco Optic Fibre Network
valued at approximately US $20 million; GRZ paying US $120 million (K557.9
billion) tax liabilities, and operators and service licences given for free
valued at approximately US $150 million market value, barring a fourth mobile
operator from the Zambian market and PSTN Public Switched Telephone Network
exclusivity.”

Prior to his appointment to the Ministry
of Communication, Soko was technical director of Zamtel, and in an email to
Jalasi, copied to Chipwende, and Dr Chembe, Heilner of RP Capital stated that:
“Luwani Soko’s move from Zamtel to MCT (Ministry of Communications and
Transport) needs to be delayed until 21st October so he can participate in
labour negotiation process in interim he should be required to report to
licensing and regulation committee.”

The report of the inquiry concluded
that “Clearly, Mr. Soko, having participated in labour negotiations at Zamtel
was not a member of the negotiating team.”

The committee stated “with
authority” that all procedures relating to the sale were not complied
with.”

“On particular note, however, are the following: The arbitrary
appointment of RP Capital Partners Cayman Islands by Dora Siliya for the
valuation of Zamtel assets with no thought given to their terms of reference.
Whether the direct selection of RP Capital Advisors as transaction advisors by
ZDA was based on Mr. Chipwende’s assertion to ZPPA that they had previously
executed a related assignment to the satisfaction of the ZDA board (which was at
best misleading), or as he stated to this committee that RP Capital refused to
hand over their valuation report unless they were appointed transaction
advisors, their appointment was at the very least highly irregular. Neither of
the above reasons advanced can form the basis for appointment of an unknown and
unproven consultant for such an important assignment.”

The report
revealed that the decision by Cabinet to sell Zamtel was made without an asset
valuation report, and LAP GreenN ought to have been disqualified at the
pre-qualification stage, and the negotiating team was not independent as
required by law.

The report also revealed that Zambia’s interpretation and
implementation of United Nations resolution 1970 on freezing assets belonging or
linked to the fallen regime of late Colonel Muammar Gaddafi was decided by RP
Capital in an emailed directive on May 6, 2011.

“An announcement be made
to the public by GRZ through ministerial statement or otherwise outlining the
new board composition to be headed by (now judge) Dominic Sichinga and making
clear the steps by the government in order to comply with the sanctions and
further highlight that there should be no impediment to Zamtel proceeding in the
ordinary course of business,” read the excerpts of the email Heilner sent to
Jalasi and copied to Chipwende and a Peter Nemeth.